1. business and industrial
2. energy
3. renewable energy
4. solar energy

SunPower Analyst Day
November 18, 2010
© 2010 SunPower Corporation
© 2010 SunPower Corporation
Agenda
 Tom Werner, CEO
– Strategy, Cost, LCOE
 Jim Pape, President
– Residential & Commercial
 Howard Wenger, President
– Utility and Power Plants
 Chuck Boynton:, VP Finance and Corp. Development
– Modeling
 Dennis Arriola, EVP CFO
– Finance
 Q&A
© 2010 SunPower Corporation
2
Safe Harbor Statement
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forwardlooking statements are statements that do not represent historical facts and may be based on underlying assumptions. Forward-looking
statements are made in this presentation regarding management’s plans and expectations regarding future financial results, operating results,
business strategies, projected costs, products and utilities projects and competitive positions, industry trends, and management’s plans and
objectives for future operations, including: (a) 2010, 2011 and 2012 GAAP and non-GAAP financial and operating forecasts (such as revenue,
gross margin, EPS, ASP, gross profit/watt, operating expenses, tax rates, etc.), and allocation of MW recognized; (b) 2011 financing plan and
growth drivers, visibility into 2011 and 2012, including cost reduction roadmap, UPP and R&C forward contracts and dealer growth, robust
business model and strong balance sheet, liquidity and cash flow; (c) execution of vertical integration strategy, such as drive for scale and cost
reduction; (d) ability to monetize 5GW of pipeline; (e) efficiency adjusted cost/watt reduction and drivers of cost reduction, including 2011
actions; (f) Oasis cost savings and the company’s low LCOE; (g) the ramp schedule for Fab 3 and expected savings; (h) commercial rooftop BOS
cost reduction and RLC growth in partners and MWs; (i) bankability of SunPower power plants and lower cost of funds; (j) potential of the
SunPower concentrator PV system; (k) target schedule for CVSR; (l) finance and sale of Italian power plants in 2010, including Montalto 44
financing; (m) visibility into the UPP segment and projected growth of UPP market opportunity and revenues; (n) gross margin for UPP segment
and leadership in value chain; (o) production, panel shipped, module revenue and cost/watt forecasts for 2010 and 2011; (p) UPP and R&C 2010
and 2011 MW recognized, ASP and gross profit/watt; (q) R&C key financial metrics and drivers forecasted for 2010 and 2011; (r) debt,
debt/equity and debt/trailing EBITDA ratio forecast and target; (s) cash inflows in Q4 2010 and Q1 2011; (t) potential combination of A and B
shares; and (u) Q4 2010 and Q1 2011 business catalysts, and financial focus and levers in 2011. Such forward-looking statements are based on
information available to the company as of the date of this presentation and involve a number of risks and uncertainties, some beyond the
company’s control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including
risks and uncertainties such as: (i) potential difficulties associated with operating the JV with AUO and integrating the SunRay business, and the
company’s ability to achieve the anticipated synergies and manufacturing benefits from these transactions; (ii) the company’s ability to obtain
and maintain an adequate supply of raw materials, components, and solar panels, as well as the price it pays for such items; (iii) general
business and economic conditions, including seasonality of the industry; (iv) growth trends in the solar power industry; (v) the continuation of
governmental and related economic incentives promoting the use of solar power, particularly such incentives affecting the markets in which
the company sells solar panels and constructs commercial systems and power plants; (vi) the significant investment required to construct
power plants and the company’s ability to sell or otherwise monetize power plants; (vii) the improved availability of financing arrangements for
the company’s utilities projects, including Montalto 44, and the company’s customers; (viii) construction difficulties or potential delays,
including obtaining land use rights, permits, license, other governmental approvals, and transmission access and upgrades; (ix) increasing
competition in the industry and lower average selling prices; (x) the JV’s ability to ramp new production lines in Fab 3 and the company’s ability
to realize expected manufacturing efficiencies throughout its manufacturing operations; (xi) manufacturing difficulties that could arise; (xii) the
success of the company’s ongoing R&D efforts and the acceptance of the company’s new products and services; (xiii) the company’s
international operations; (xiv) the company’s liquidity, substantial indebtedness, and its ability to obtain additional financing; (xv) the
company’s ability to protect its intellectual property; (xvi) evolving regional permitting, financing, grid interconnection, technical, and other
customer or regulatory requirements, and the company’s ability to satisfy such requirements; (xvii) possible impairment of goodwill; (xviii)
possible consolidation of the joint venture AUO SunPower; (xix) receipt of tax opinion regarding combination of A and B shares; and (xx) other
risks described in the company’s Annual Report on Form 10-K for the year ended January 3, 2010 and Quarterly Report on Form 10-Q for the
quarter ended October 3, 2010, and other filings with the Securities and Exchange Commission. These forward-looking statements should not
be relied upon as representing the company's views as of any subsequent date, and the company is under no obligation to, and expressly
disclaims any responsibility to, update or alter its forward-looking statements, whether as a result of new information, future events or
otherwise.
This presentation is not an offer of securities for sale in the United States, and the securities referred to in this presentation relating to
Montalto 44 may not be offered or sold in the United States absent registration or an exemption from registration. The issuer of the securities
does not intend to offer or sell these securities in the United States, and intends to conduct any offering of these securities outside the United
States in reliance on Regulation S under the Securities Act of 1933.
© 2010 SunPower Corporation
3
Tom Werner, CEO
Strategy, Cost, LCOE
© 2010 SunPower Corporation
© 2010 SunPower Corporation
SunPower Analyst Day Highlights
 2011 Guidance:
– Revenue up to 30% growth v. 2010 midpoint guidance
– Non-GAAP EPS up to 32% growth v. 2010 midpoint guidance
 High confidence in 2011 outlook and into 2012
– Scale differentiated technology through both UPP and R&C segments
– Cost reduction on track: panel and BOS
– UPP and R&C forward contracts + dealer growth model = visibility
– Robust business model to adjust to changing market conditions
– Solid balance sheet
 Transparent modeling: detailed business, finance and modeling drivers
© 2010 SunPower Corporation
5
SunPower 2010 – 25th Anniversary
2010: Revenue $2.15-$2.25B
World-leading solar conversion efficiency
5,500+ Employees
Diversified portfolio: roofs to power plants
550+ MW 2010 production
1,500 dealer partners, #1 R&C USA
>1.5 GW solar PV deployed
5 GW power plant pipeline
Residential
Commercial
Power Plants
© 2010 SunPower Corporation
6
High-Efficiency, High Energy Collection Systems
World’s Most Efficient Solar Cell: 22%
Residential Rooftop
Commercial Rooftop
Ground Systems
E18 225 W Panel
T5 Roof Tile
Oasis
Aesthetic
Up to 2X Power/Roof
Up to 25% More Energy
© 2010 SunPower Corporation
7
Vertical Integration Strategy
Upstream
Poly
Ingot
Wafer
Downstream
Cell
Panel
BOS
Sales
Install Services
 World‘s highest efficiency panels
 Adjust rapidly to market conditions
 Sustainable differentiated advantage
 Integrated cost reduction
 Drive for scale and cost reduction
 Premium brand / superior service
© 2010 SunPower Corporation
8
SPWR Downstream Strategy
UPP Segment
BOS
Ingot
Wafer
EPC
Services
 Multi-year fixed price contracts
Upstream
Poly
Proj.
Dev.
 NA, EMEA, emerging markets
Cell
Panel
 System-level cost reduction
 World’s highest efficiency panels
R&C Segment
 Sustainable differentiated advantage
 Drive for scale and cost reduction
BOS
Dist.
Sales/
Services
Install
 NAC: Multi-Qtr fixed price contracts
 RLC: global dealer/partner network
 System-level cost reduction
© 2010 SunPower Corporation
9
FY10 Revenue Summary
Suntech
First Solar
MEMC
SunPower
LDK
REC
SolarW…
JA Solar
Yingli…
Q-Cells
Trina…
Canadia…
ReneSola
2010 Revenue (Est)
Motech
2009 Revenue (Actual)
Solarfun
$-
$500
$1,000
Sources: Company announcements and guidance, Reuters Knowledge
$1,500
$M
$2,000
$2,500
$3,000
© 2010 SunPower Corporation
10
FY10 Non-GAAP Gross Profit $/W Summary
$0.88
$0.86
First Solar
SunPower
SolarWorld
REC
Yingli Green
Trina Solar
Q-Cells
Suntech
Solarfun
ReneSola
JA Solar
Canadian Solar
Motech
Gintech
LDK
$0.74
$0.57
$0.53
$0.52
$0.44
$0.33
$0.29
$0.28
$0.26
$0.26
$0.26
$0.19
$0.18
$-
$0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90
Sources: Company guidance, Reuters Knowledge
Note: GP $/W = Gross Margin x (Revenues ÷ Watts (Wafers, Cells, Modules) Shipped)
© 2010 SunPower Corporation
11
Efficiency Adjusted Cost/Watt*
Q4’09
Q4’10
Q4’11
SunPower 19% Panel Cost / Watt**
$1.91
$1.71
$1.48
Efficiency Adjusted (vs. 14%)
$1.47
$1.36
$1.08
Efficiency Adjusted (vs. 11%)
$1.01
$0.92
$0.71
 Cost reduction drivers
− Leveraging R+D investments
− Improved manufacturing efficiency
− Increased ramp, yield and OEE
− Fab 3 JV with AUO
*Efficiency adjustments consider the BOS/tracking benefits of high efficiency panels.
**Base Cost/Watt excludes freight and pre-op expenses.
Comparison: 14% panel on T20 tracking system, 11% panel on fixed tilt.
© 2010 SunPower Corporation
12
System Cost: BOS Matters
2010 Tracking Power Plant
Panel
BOS
© 2010 SunPower Corporation
13
2011 Panel Cost Reduction Roadmap
$/W
$1.80
$1.70
$0.04
$0.03
$0.04
$1.60
$0.07
$1.50
1.71
$0.05
$1.40
1.48
$1.30
Q4
2010
Poly
Ingot
Wafer
Cell
Panel
Q4
2011F
On track to meet efficiency adjusted cost/W of $1.08 in Q411
*Efficiency adjustments consider the BOS/tracking benefits of high efficiency panels v. 14% panels on T20 tracking system.
**Base Cost/Watt excludes freight and pre-op expenses.
© 2010 SunPower Corporation
14
2011 Panel Cost Reduction Roadmap
Value Chain Step
$/W
Cost Reduction Actions
Poly
$0.04
90% contracted, finalizing M.Setek value
chain
Ingot
$0.03
WJE and M.Setek scaling and lowering costs
Wafer
$0.04
Reduced wafer thickness, Scale at FPSC
Ramping on site wafering at Fab 3
Cell
$0.07
Chemical consumption reduction ($0.02),
OEE and yield ($0.05)
Panel
$0.05
Lean manufacturing ($0.02), outsourced
module production cost improvement ($0.02),
materials cost reduction ($0.01)
Total 2011
$0.23
© 2010 SunPower Corporation
15
2014 Panel Cost Reduction Roadmap
$/W
$3.50
$3.00
$3.01
Fab 3 Ramp
135 um wafers
Lean Fab Mngt
Material Red‘n
$2.38
$2.50
$1.91
$2.00
Gen 3 Ramp
$1.71
$1.50
$1.00
$1.00
Step Red‘n
DW Sawing
$0.50
$Q407
Q408
Q409
Q410
Q411
Q412
Q413
Q414
© 2010 SunPower Corporation
16
Oasis Modular Power Plant Savings
Oasis 25% Balance-of-System Savings by Category
100%
9%
8%
80%
60%
40%
8%
Inverter, Cabling
Tracker
Components
Electrical &
Structural
System
Optimization
Design,
Overhead,
Installation
Commissioning
20%
0%
2010 BOS Cost Standardization
Materials /
/ Volume
Design Savings
Savings
Installation
Efficiency
Savings
2011 Oasis
BOS Cost
© 2010 SunPower Corporation
17
LCOE: Total Cost of Ownership & Capacity Factor
LCOE =
Total Life Cycle Cost
NPV Energy Output
Panel = $ / Watt
=
Panel Cost + BOS Costs + NPV (O&M Costs)
NPV (kW x kWh/kW)
LCOE = ¢ / kWh
− Industry-leading panel efficiency = lower balance of system cost per watt
− High capacity factor = lower balance of system cost per watt, more kWh/kW
18
SunPower LCOE Competitive with Thin Film
LCOE Sensitivities: $/Wp, Capacity Factor
$4.00 / Wp
$3.38 / Wp
SPWR Oasis
11% Fixed Tilt
$0.170
$0.170
Sacramento
8.5% IRR
LCOE =
Total Life Cycle Cost
NPV Energy Output
=
Panel Cost + BOS Costs + NPV (O&M Costs)
NPV (kW x kWh/kW)
Note: Includes ITC, IRR is unlevered
19
SunPower LCOE Competitive with Thin Film
LCOE Sensitivities: $/Wp, Capacity Factor
$4.00 / Wp
$3.38 / Wp
$3.00 / Wp
$2.55 / Wp
SPWR Oasis
11% Fixed Tilt
SPWR Oasis
11% Fixed Tilt
$0.170
$0.170
$0.130
$0.130
Sacramento
8.5% IRR
LCOE =
Total Life Cycle Cost
NPV Energy Output
=
Panel Cost + BOS Costs + NPV (O&M Costs)
NPV (kW x kWh/kW)
Note: Includes ITC, IRR is unlevered
20
SunPower LCOE Competitive with Thin Film
LCOE Sensitivities: $/Wp, Capacity Factor, Location, Unlevered IRR
$4.00 / Wp
$3.38 / Wp
$3.00 / Wp
$2.55 / Wp
SPWR Oasis
11% Fixed Tilt
SPWR Oasis
11% Fixed Tilt
$0.170
$0.170
$0.130
$0.130
$0.128
$0.131
$0.097
$0.100
Sacramento
8.5% IRR
Mojave
7.5% IRR
LCOE =
Total Life Cycle Cost
NPV Energy Output
=
Panel Cost + BOS Costs + NPV (O&M Costs)
NPV (kW x kWh/kW)
Note: Includes ITC, IRR is unlevered
21
SunPower UPP LCOE Range
$/kWh
$0.25
$0.20
$0.15
$0.10
$0.05
$0.00
2010
Note: Includes ITC
2011
2012
2013
2014
© 2010 SunPower Corporation
22
SunPower
SunPowerLCOE
LCOEAdvantages
Advantages― 100GWh Plant*
SunPower
11% TF Fixed
GWh/yr
100
100
MW
37
46
Acres
191
351
Inverters
74
92
SunPower
Note: Illustrative 100 GWh / year power plant, Phoenix, AZ
SunPower delivers
the same GWh using
far fewer acres and
less BOS leading to
lower O&M costs
Thin Film
© 2010 SunPower Corporation
23
SunPower
SunPowerLCOE
LCOEAdvantages
Advantages― 100GWh Plant*
SunPower
11% TF Fixed
GWh/yr
100
100
Total $
$200 MM
$200 MM
$/Wp DC
$4.37
$3.50
SunPower delivers
the same LCOE with
a 25% $/Wp price
premium
Economically equivalent to customer
SunPower
Note: Illustrative 100 GWh / year power plant, Phoenix, AZ
Thin Film
© 2010 SunPower Corporation
24
AUO SunPower Fab 3 Capacity Ramp Status
 Lines 1 & 2 operational and running
 Line 3 install on plan
 Yields ahead of ramp plan
 ~900 employees hired
 Integrating M.Setek‘s onsite wafering
 Reduced Fab 3 2011 CapEx by $40M
 Improved cell processing: $30M in savings
© 2010 SunPower Corporation
Jim Pape, President
Residential & Commercial
© 2010 SunPower Corporation
© 2010 SunPower Corporation
Agenda
 Premium Brand, Superior Service
 System Cost Reduction
 Rapidly Adjust to Market Conditions
 Flexible Channel Structure Yields Predictability
– SunPower Dealer Partner Network
– North American Commercial
© 2010 SunPower Corporation
Complete Solar Solution
PRODUCT
WARRANTY
 10-year Product
Warranty
 25-year
Performance
Warranty
Panels
Inverters
Mounting
Systems
Monitoring
Industry-leading
Warranty
© 2010 SunPower Corporation
28
Highest Value Technology
The Planet’s Most Powerful Solar™
1
More Power/Roof = Bigger Savings
2
Blends Seamlessly With Your Roof
© 2010 SunPower Corporation
29
SunPower Delivers the Most Energy per Roof
250 ft2 Solar System
Peak Power
Electricity Savings
SunPower 18 x 230 W
Conventional 18 x 165 W
4.1 kWp
3.0 kWp
85%
62%
* Sacramento, CA 2,600 ft2 home using 7,000 kWh per year (Source, RLW Analytics)
© 2010 SunPower Corporation
30
2011 Commercial Rooftop BOS Cost Roadmap
100%
3%
90%
3%
2%
3%
80%
70%
60%
50%
Q4 2010
Channel
Electrical Mechanical
BOS
BOS
Value
Added
Services
Q4 2011
31
RLC Major Market Outlook
Market
Retail Rate
Parity (Yrs)
> 10% Share
Share Goal
2010-2012
California
<5
Yes
Grow
New Jersey
<5
Yes
Stable
New York
<5
Yes
Stable
Varies
Yes
Grow
Italy
<5
No
Grow
Germany
5+
No
Stable
Spain
5+
No
Stable
Varies
No
Grow
Japan
<5
No
Grow
Australia
<5
No
Grow
China
5+
No
Grow
Rest of US
Rest of EU
32
2011 R&C Grows with Fab 3 Production
2011 R&C Panel Allocation (MW)
160
140
NAC: 70% Booked
120
100
80
RLC: Booking into Q1
60
40
20
0
Q1
Q2
RLC
Q3
Q4
NAC
33
Flexible & Predictable Growth
Dealer Partners and RLC Megawatts by Year
Dealers
2,000
MW
350
300
1,600
250
1,200
200
800
150
100
400
50
0
0
2005
2006
2007
2008
Dealers - Year End
2009
2010F
2011F
MW
34
Standard PV Industry Model
Residential Installations
Customer Support
Installation
Sales
System Design
Dealer
Design Tools
Support
Financing
Lead Generation
Training
Distributor
Inventory and Distribution
Marketing and Branding
PV Manufacturer
Manufacturing
35
SunPower Support
Residential Installations
Customer Support
Installation
Dealer
Sales
System Design
Design
Tools
DesignSunPower
Tools
Support
Financing
Lead Generation
SunPower
Training
Distributor
Inventory and Distribution
Marketing and Branding
PV Manufacturer
Manufacturing
36
SunPower Comprehensive Partnership
A Value-Based Loyalty Program
SunPower
Comprehensive
Partnership
Manufacturing
Marketing &
Branding
Inventory &
Distribution
Training
Lead
Generation
Financing
Support
Design Tools
37
SunPower Quality: Beyond Certification Standards
- Certification is needed to sell PV modules …
… but it is not sufficient to assure high reliability. Also need:
-
Highly Accelerated Life Testing
-
Failure Modes & Effects Analysis
-
Supplier Quality Control
-
Statistical Process Control
-
Continuous Manufacturing Reliability Testing
-
Highly Accelerated Stress Audit
-
Ongoing Reliability Testing
Manufacturing
Marketing &
Branding
Inventory &
Distribution
Training
Lead
Generation
Financing
Dealer
Support
System
Design
38
Local Strength + Global Recognition




Full co-branding support
Demand generating materials
Smart Store
Paid for by market
development
& training fund
 Lead generation
– Organic & paid search
– 3rd party research sites
– Affiliate networks
– 1-800-SUNPOWER
– Campaigns & events
Manufacturing
Marketing &
Branding
Inventory &
Distribution
Direct Mail – Brochures – Ads – Vehicle Wrapper – Showroom Displays –
Tradeshow Booths – Website Templates – Sales Tools - Merchandise
Training
Lead
Generation
Financing
Dealer
Support
System
Design
39
Warehouse-Free Inventory and Distribution
 Direct to job site delivery within 100 miles of warehouse
 24-hour delivery confirmation
 Real-time order tracking on Dealer Portal
 Container can be used for recycling and refuse
Manufacturing
Marketing &
Branding
Inventory &
Distribution
Training
Lead
Generation
Financing
Dealer
Support
System
Design
40
Comprehensive Training Program
Curriculum:
Sales, Design & Installation
Trainers:
70+ years of combined experience
Methods:
Online, Classroom, Onsite support
Trained Students:
>20k Online Lessons, 2k Classroom
Manufacturing
Marketing &
Branding
Inventory &
Distribution
Training
Lead
Generation
Financing
Dealer
Support
System
Design
41
Streamlined Financing
Pre-established relationships
Access to solar portfolio lenders
Variety of solutions:
Solar Loans, Home Equity Loans, Leases
Manufacturing
Marketing &
Branding
Inventory &
Distribution
Training
Lead
Generation
Financing
Dealer
Support
System
Design
42
World Class Dealer Support
Information
Systems
Order
Management
Web Portal
Marketing
Design &
Installation
1.800.SUNPOWER
Dealer
Technical
Support
SunPower Regional
Manager
Manufacturing
Marketing &
Branding
Inventory &
Distribution
Training
Lead
Generation
Finance
Financing
Dealer
Support
System
Design
43
Dealer Program Scores High Satisfaction
Industry Net Promoter Scores v.
NA RLC End-Customer Satisfaction
SunPower
SunPower Net Promoter Score at 70% in line with Apple at 78%
44
NAC: Why We Win
World Class Solar Systems Salesforce
Focus on vertical markets: Federal, education, water
Structure innovative offers: Carports, trackers, muni bonds, SRECs
Sell NPV-based solutions to C-level customers
Long-term Commitment to Customers
Proven Performance Credibility
45
SunPower Delivers the Most Energy per Roof
77%*
54%*
Watts per Panel (Wp)
Panel Efficiency
System Size (kWp)
Annual Electricity (kWh)
 Offset more of your electrical bill
 Minimize future rate increase impact
 Reduce your company‘s carbon footprint
SunPower E13
Series
SunPower E19
Series
228
318
13.9%
19.5%
86
120
+39%
134,869
192,675
+43%
Comparison of 10,000 ft2 solar arrays using SunPower’s T10 roof tile system (10° tilt) in Los Angeles, CA
*Percentage offset assumes 250,000 kWh demand/year
46
Education
―We‘re proud to serve as a model for
educational institutions statewide and
across the nation in achieving energy
sustainability and preserving the
environment, while reducing energy
costs and thereby maximizing
resources for students.‖
— Martha J. Kanter, Chancellor, FoothillDeAnza Community College District
School Districts
Community Colleges
Universities
Natomas Unified
School District
Los Angeles Community
College District
Harvard Business School
Los Angeles Unified
School District
Glendale Community
College
UC Berkeley
Kearny School District
Margate School District
California Community
Colleges
Howell Township
Public Schools
Cape Cod Community
College
Tom‘s River Schools
Foothill-De Anza Community
College District
UC Santa Barbara
California State University
Loyola Marymount
University
New Paltz University
Monmouth Univeristy
University of Wyoming
Fortune 1000
―From hybrid electric delivery trucks to
solar power, we are proud to lead our
industry in committing to real, practical
way to reduce pollution, conserve
fossil fuels, and contribute to a
greener world.‖
— Mitch Jackson, Managing
Director, Corporate and International
Environmental Programs, Federal Express
Applied Materials
AT&T Inc.
Costco
Dow Jones
FedEx
Ford
Gap
Harley Davidson
Hewlett-Packard
JC Penney‘s
Johnson & Johnson
Longs Drugs
Lowe‘s
Macy‘s
Merck
Microsoft
Roche
Target
Tiffany & Co
Toyota
Wal-Mart
Whole Foods Market
Local Government
―On-site solar electric generation is
a key step in our drive to reduce
energy costs and consumption, while
achieving greater self-sufficiency and
sustainability. We‘re delighted to be
doing our part to enhance the
environmental quality of our
community, and confront
challenging budget issues.‖
— Anthony Intintoli, Jr., Mayor of Vallejo, CA
City Agencies
Anaheim Convention Center
Berkeley Sunlight & Power
Livermore City Hall
Oakland Ice Center
San Francisco Moscone Center
Chicago Social Security Center
City of Chico
City of Fresno
San Diego Police Department
City of Richmond
City of Vallejo
Water Agencies
―SunPower ‗s solar tracking
technology is modular, and goes in
very quickly: In August we had dirt
fields, and by October we
had 7.5 acres of trackers
installed, following the sun.‖
— Patrick Sheilds, Executive Manager
of Operations Inland Empire Utilities Agency
Las Vegas Valley Water District
Metropolitan Water District
Inland Empire Utility Agency
Alameda County Water District
Calera Creek Water Recycling Plant
Middlesex Water Company
SF Southeast Wastewater
Treatment Plant
Hill Canyon Water Treatment Plant
Vallejo Pump Station
Elsinore Valley Municipal Water District
Los Angeles Department of
Water & Power
Sonoma County Water Agency
West Basin Municipal Water District
Santa Clara Valley Water District
Rancho California Water District
Santa Rosa Water Reclamation Facility
New York Power Authority-Milwood
Water Treatment Plant
Yuba City Water Treatment Facility
Easy Bay Municipal District
Federal
―We‘re pleased that our solar
plant enables the Air Force to
demonstrate it‘s leadership in
reducing dependence on
traditional forms of electric.‖
— Major Don Ohlemacher, Operations Flight
Chief & Acting Commander of 99th Civil
Engineer Squadron, Nellis Air Force Base
Nellis Air Force Base
Environmental Protection Agency
Federal Correctional Institution
MCAGCC Twentynine Palms
National Institute of Standards
& Technology
United States Air Force
United States Coast Guard
U.S. Navy Coronado
U.S. Navy Pearl Harbor
U. S. Postal Service
U.S. Department of Energy
U.S. General Services
Administration
U.S. National Park Service
U.S. State Department
Howard Wenger, President
Utility and Power Plants (UPP)
© 2010 SunPower Corporation
© 2010 SunPower Corporation
SunPower UPP: Why We Win
1
Technology – Industry-leading module to system products.
Standardized architecture for scalability and cost reduction
2
Bankability – Lowest risk, highest performing, easiest to
permit power plants with a competitive LCOE
3
Value added services – Grid interface, O&M, and
performance prediction leadership
4
Development – Best-in-class development capability
offering exceptional land and power plant positions globally
5
Components Sales – Strategic multi-year and spot sales of
panels, trackers, & Oasis to position and smooth revenue
© 2010 SunPower Corporation
53
UPP Value Chain Integration
Technology
 Performance
and quality
leader
 PV, tracker,
system
 Oasis: First
standard
power block
 On horizon:
CPV
Project
Development
 GW-scale
pipeline
 Global
development
team
 Control,
visibility,
maximize
margin $
EPC
Component
& Plant
Sales
 Full turnkey
 Panel to
EPC services
power plant
sales
 Most MW
experience
 Arranging
since 1995
financing and
selling to
 Strategic EPC
integrators,
partnerships
financial
for scalability
institutions,
IPPs, utilities
Services
 24x7 eyes on
the assets
 99%+
availability
 500 MW
monitored
 Future value
added services
© 2010 SunPower Corporation
54
UPP: Utility, IPP and Financial Customers and Partners
We’re #1: 400 MW+ power plants delivered by SPWR
© 2010 SunPower Corporation
55
Oasis Evolution: Standard systems, lower cost, more features
Feature
Panel
Capacity per tracker
Pre-fabricated structure
Advanced inverter functionality
2007
12 MW Nellis
2010
19 MW Xcel
2011
25+ MW
T20 Gen 1
T20 Gen 2
Oasis 2011
225 W
400 W
425 W
2.5 kWp
3.6 kWp
17.0 kWp
Yes
Yes
Yes
Yes
Yes
Pre-fabricated electrical
Yes
Turn-key AC power block
Yes
© 2010 SunPower Corporation
56
Oasis Power Blocks
Drive Standardization, Enable Whole System Component Sales
 1 MW Power Block = SKU
 Tracker blocks = standard units
- Configure to fit land boundary
- Smallest block = 300 kWdc
 Inverter/power electronics standard blocks
Oasis blocks rotate to fit land boundaries
© 2010 SunPower Corporation
57
Advanced Grid Integration Services
(1) Spike in
transmission
system voltage
(2) SunPower
smart controller
absorb reactive
power to reduce
transmission
voltage
(3) Transmission
voltage returns to
setpoint
First PV power plant in North America with automated voltage control
on the transmission system – 10MW+ SunPower system
© 2010 SunPower Corporation
58
Oasis Modular Power Plant Savings
Oasis 25% Balance-of-System Savings by Category
100%
9%
8%
80%
60%
8%
Inverter, Cabling
Tracker
Components
Electrical &
Structural
System
Optimization
40%
Design,
Overhead,
Installation
Commissioning
20%
0%
2010 BOS Cost Standardization /
Materials /
Volume Savings Design Savings
Installation
Efficiency
Savings
2011 Oasis BOS
Cost
© 2010 SunPower Corporation
59
SunPower UPP LCOE Competitive with CA MPR
$/kWh
$0.25
$0.20
$0.15
$0.10
CA 2009 MPR
$0.05
$0.00
2010
2011
2012
2013
2014
Notes: LCOE = delivered electricity price to utility via PPA; MPR=25-yr Market Price Referent , 30% ITC /MACRS included
unlevered return range for plant owner 7.5%-8.5%, sunlight range included
© 2010 SunPower Corporation
60
SunPower Bankability: Module Reliability
100%
SunPower v. 3th Party Power vs.
Damp Heat Cycle Tests
Incoming inspection of
3rd party panel showing
micro cracks
80%
60%
40%
20%
0%
1000 2000 3000 4000 5000 6000 7000
SunPower
Third Party
25 Yr Warranty
 SunPower tests modules to standards far exceeding industry norms
 Many ―top tier‖ bankable PV suppliers do not pass SunPower‘s
rigorous qualification test program
© 2010 SunPower Corporation
61
SunPower Bankability: Reliable System Energy Delivery
Actual vs. Expected Annual Production: 106.2%
2005
2006
2007
Expected Energy Production
2008
SPWR Operations Center
2009
Actual Energy Production
 SunPower has delivered >1 TWh solar energy: consistently exceeding
performance predictions
 SunPower received the first investment grade rating for a PV Power Plant bond
 Focus on bankability yields lower cost of money, 100bps = ~$0.30/Wp of ASP
© 2010 SunPower Corporation
62
SunPower Concentrator PV System: Game Changer
SunPower CPV Optical Profile
 7X capacity scale per CapEx $ for UPP markets
 20% lower potential LCOE vs competing PV
 SunPower solar cell originally designed for CPV
– Current cell uniquely suitable for CPV
– Cell efficiency increases with concentration
CPV Beta Test System
 #1 Program Focus on Bankability
– Silicon PV, proven 1-axis tracking,
established module materials, glass
mirrors, passive cooling
 MW-scale beta deployment in 2011
 Benefits as early as 2012
© 2010 SunPower Corporation
63
SunPower California Valley Solar Ranch: 250 MW
© 2010 SunPower Corporation
64
CVSR: Efficiency/BOS Case Study
 Most power plants are constrained
 SunPower maximizes MW/acre
 More MW/acre lowers BOS/kWh
– Land
– Permitting/development
– Transmission/substation
– Foundations/structures
– Cabling/trenching
– Shipping
Solar Array
Open Space
– Roads
– Fencing/security
SPWR
14% x-Si
11% TF
– Construction management
250 MW
186 MW
146 MW
– O&M
Notes: PPA announced 8/15/08; illustrative layout as of May 2010, subject
to change; final project design may include std efficiency panels
© 2010 SunPower Corporation
65
California Valley Solar Ranch: Target Schedule
Q1 2011 – Planning Commission hearings
Q1/Q2 2011 – Board of Supervisors/Permit
Q3/Q4 2011 – Start of Construction
Q4 2011/Q1 2012 – Phase I Complete/First 25MW on-line
Q4/2013 – Project Completion
CVSR visual simulation from highway
© 2010 SunPower Corporation
66
Italy Project Overview
Q1 ’10
2009
Q2 ’10
Q3 ’10
Q4 ’10
Q1 ’11
Montalto 20
Montalto 8
Montalto 44
Solare Roma 13
Permitting
* Power plant capacity in MW ac
Construction
Financing
Sale
© 2010 SunPower Corporation
67
Strong 2011 UPP Visibility
2011 UPP Panel Allocation (MW)
160
140
Int‘l: 100% Projects Id‘d
120
100
80
NA: 95% in Backlog
60
40
Comp: 50% in Backlog
20
0
Q1
Q2
Components
Q3
UPP NA
Q4
UPP Int'l
© 2010 SunPower Corporation
68
UPP Growth and Position, 2010-2015 View
 Financials
– SPWR UPP >$1B revenue 2010 (4X increase in 2 years)
– Addressable market expected to triple to >$25 Billion/year
– Forecasting 25%+ CAGR to 2015
– Sustainable high gross margin $/W
 Market Approach
– A leader in US, expected to be biggest market in 3 years
– Diversified international markets (e.g., Italy, UK, Greece, Israel, India, China, S. Africa)
– Balanced portfolio of development/power plant sales and component sales
 Technology & Value Chain
– Leader in power block technology (Oasis), select grid integration, ancillary services
– BOS cost down by 50%+
– CPV upside to revenue generation with 7:1 capex lever
© 2010 SunPower Corporation
69
Alamosa 19 MW: Xcel
Alamosa County, CO
© 2010 SunPower Corporation
70
Amherstburg Solar Farm, 20 MW
Ontario, Canada
© 2010 SunPower Corporation
71
Montalto 72 MW: Lazio, Italy
Largest Solar Power Plant (GWh)
© 2010 SunPower Corporation
72
9 MW in Progress
Alange, Spain
© 2010 SunPower Corporation
73
First Systems in Greece
Crete
74
© 2010 SunPower Corporation
First T0 Tracker in India
Hyderabad
75
© 2010 SunPower Corporation
…and we‘re putting power plants
on rooftops too…
6MW T5 Installation for
Southen California Edison
© 2010 SunPower Corporation
76
Chuck Boynton, VP Finance and Corp. Dev.
Modeling Drivers
© 2010 SunPower Corporation
© 2010 SunPower Corporation
Non-GAAP Measures
To supplement the consolidated financial results prepared under GAAP, SunPower uses non-GAAP measures which
are adjusted from the most directly comparable GAAP results to exclude non-cash charges related to amortization
of intangible assets and promissory notes, stock-based compensation and interest expense as well as exclude noncash net gains on mark-to-market derivative instruments, a gain on the change in our equity investment in a joint
venture, a gain on deconsolidation of consolidated subsidiary, and the related tax effects of these adjustments. In
addition, the presentation of non-GAAP results of operations reclassifies the discontinued operations results to the
natural account classifications (revenue, etc.). Management does not consider these non-cash items in evaluating
the core operational activities of SunPower. Management uses these non-GAAP measures internally to make
strategic decisions, forecast future results and evaluate SunPower’s current performance. Most analysts covering
SunPower use the non-GAAP measures as well. Given management’s use of these non-GAAP measures, SunPower
believes these measures are important to investors in understanding SunPower’s current and future operating
results as seen through the eyes of management. In addition, management believes these non-GAAP measures are
useful to investors in enabling them to better assess changes in SunPower’s core business across different time
periods. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data and may
be different from non-GAAP measures used by other companies.
© 2010 SunPower Corporation
Agenda
 Business Model Overview
 Factory Production Output
 Utility & Power Plant (UPP)
 Residential & Commercial (R&C)
 Operating Expense
 Other Income Expense Net (OIE)
 Tax Rate
 Equity in Unconsolidated Subsidiaries
 Share Count
 GAAP to Non-GAAP Items
© 2010 SunPower Corporation
79
SPWR Business Model
UPP Segment
BOS
Upstream
Poly
Ingot
Wafer
Cell
Panel
Proj.
Dev.
EPC
Services
R&C Segment
BOS
Dist.
Sales/
Services
Install
 Allocate the product to our down-steam business segments:
– Revenue per watt
– Gross profit dollars per watt
– Minimize risk to the company in periods where supply > demand
– Medium and long term growth potential
– Contracted development commitments
© 2010 SunPower Corporation
80
Factory Production
 Cell manufacturing is split between the three FABs
 FAB3: 50MW per line
Production Guidance
2009
Actual
2010
Forecast
2011
Outlook
FAB1 Cell Production (MW)
96
110 – 115
105 – 115
FAB2 Cell Production (MW)
302
450 – 460
515 – 535
FAB3 Cell Production (MW)*
–
4–5
280 – 320
Total SunPower Cells (MW)
398
570 – 580
900 – 945
Panel Conversion, Yield, Inventory Adjustment
91%
90% – 91%
90% – 92%
Shippable SunPower Panels (MW)
363
520 – 525
810 – 870
2
50 – 75
75 – 150
Total Shippable Panels (MW)
365
575 – 600
885 – 995
Total Modules of Recognized Revenue (MW)
365
525 – 575
785 – 900
$1.91
$1.71
$1.48
3rd Party Panels (MW)
Cost / Watt in Q4**
*SunPower share of FAB3 modules, SunPower share in 2010 is 95% and 90% in 2011
**Excludes freight and AUO ramp in 2010
© 2010 SunPower Corporation
81
Manufacturing Allocation
 Panels are allocated to Segments to maximize Gross Profit/Watt
– UPP allocation growing 2011+
Shippable Production Allocation
2009
Actual
2010
Forecast
2011
Outlook
2012+
Outlook
UPP
38%
~50%
50%–60%
50%–60%
R&C
62%
~50%
40%–50%
40%–50%
UPP Non-GAAP(1)
2009
Actual
21%
2010
Forecast
22%–23%
2011
Outlook
20%–22%
2012+
Outlook
22%–25%
R&C Non-GAAP(1)
20%
22%–23%
21%–23%
23%–26%
UPP GAAP
19%
20%–21%
19%–21%
R&C GAAP
18%
20%–21%
20%–22%
Gross Margins
 Seasonality, demand, contracted delivery schedules, FIT digressions
and price points impact allocation planning
(1) Excludes charges from intangible assets, stock based compensation and non-cash interest expense
© 2010 SunPower Corporation
82
UPP Vertical Integration: Predictable & Flexible
Development
Strengths
Challenges
EPC to 3rd Party
Components
•Higher visibility
•High visibility
•High margins
•Low price elasticity
•Medium working capital
•Low working capital
•Higher incremental
profit per watt
•Simple revenue
recognition
•Immediate revenue
recognition
•Significant working
capital
•Highly competitive
margins
•Competitive margins
during normal market
conditions
•Revenue recognition
requires project
financing and sale
© 2010 SunPower Corporation
83
Project Overview
Time
Components
Revenue recognition at time of sale
Project Example #1
Revenue recognition deferred to end of project
Project Example #2
Revenue recognition on percent complete
Permitting
Construction
Financing
Sale
Working Capital
Components
Project Example #1
Project Example #2
Low – Inventory,
accounts receivable
High – LOC, Project assets,
Project debt
Medium – Accounts
receivable, LOC,
Development costs until sale
© 2010 SunPower Corporation
84
UPP Channel Allocation and Economics
2010 UPP Channel Non-GAAP
Midpoint
$/W
$6
$5.73
$6
$5
$5
$4
$3
$1.09 $0.80
(19%) (27%)
$2
$1
$4.35
$4
$2.94
$3
$0
$2.35
$0.75 $0.64
(17%) (27%)
$2
$1
$0
Channel ASP (1)
Gross Profit
(Gross Margin %) (1,2)
Channel ASP
Gross Profit
(Gross Margin %) (2)
2009
Actual
2010
Forecast
2011
Outlook
2012+
Outlook
Systems
149
47%
260 – 290
~51%
420 – 480
~45%
875+
~50%
Components
53%
~49%
~55%
~50%
Allocation
MW Recognized
(1)
(2)
$/W
2011 UPP Channel Non-GAAP
Midpoint
Includes revenue from discontinued operations in 2010
Excludes charges from intangible assets, stock based compensation and non-cash interest expense
© 2010 SunPower Corporation
85
R&C Channel Allocation and Economics
$/W
$6
$5
2010 R&C Channel Non-GAAP
Midpoint
$6
$5.15
$4
$5
$3
$0.74 $0.85
(14%) (25%)
$2
$1
$4.50
$4
$3.35
$3
$2.75
$0.85 $0.67
(19%) (24%)
$2
$1
$0
$0
Channel ASP
Channel ASP
Gross Profit
(Gross Margin %) (1)
Gross Profit
(Gross Margin %) (1)
2009
Actual
2010
Forecast
2011
Outlook
200
260 – 290
365 – 420
NAC
16%
~13%
20% – 25%
RLC
84%
~87%
75% – 80%
Allocation
MW Recognized
(1)
$/W
2011 R&C Channel Non-GAAP
Midpoint
Excludes charges from intangible assets, stock based compensation and non-cash interest expense
© 2010 SunPower Corporation
86
R&C: NAC Key Metrics and Drivers
2009 Actual
2010 Forecast
2011 Outlook
47
95 – 100
135 – 145
Bookings per Watt
$5.74
$5.00 – $5.05
$4.25 – $4.45
Bookings ($MM)
$270
$480 – $490
$575 – $600
Revenue ($MM)
$186
$180 – $190
$390 – $440
MW Recognized
32
35 – 40
80 – 95
Revenue / Watt (1)
$5.76
$5.10 – $5.19
$4.40 – $4.60
Non-GAAP Gross Profit / Watt (1)
$0.74
$0.73 – $0.75
$0.75 – $0.85
Non-GAAP Gross Margin (%) (1)
13%
14% – 15%
17% – 19%
$57
$330 – $336
$400 – $430
MW Booked
Ending Backlog ($MM)
(2)
 NAC Key Drivers:
– Strength of entering backlog
– Percentage of booking with deferred revenue
– BOS and PV cost reduction
– Timing of delivering the backlog (7 to 12 mo project duration)
(1)
(2)
Excludes charges from intangible assets, stock based compensation and non-cash interest expense
Backlog projects are the sites for projects that have been sold and are ready for installation and are currently being
developed
or constructed
© 2010
SunPower
Corporation
87
R&C: RLC Key Metrics and Drivers
2009 Actual
2010 Forecast
2011 Outlook
184
225 – 250
280 – 325
Revenue per Watt (Panel)
$3.49
$3.05 – $3.10
$2.40 – $2.50
Revenue per Watt (Bundle)
$3.91
$3.45 – $3.55
$2.80 – $2.95
Blended Revenue / Watt
$3.72
$3.30 – $3.40
$2.70 – $2.80
Non-GAAP Gross Profit / Watt (1)
$0.75
$0.80 – $0.90
$0.60 – $0.70**
Non-GAAP Gross Margin % (1)
20%
24% – 26%
22% – 25%
Bundle Inclusion Rate (2)
65%
74% – 76%
70% – 80%
Number of Dealer Partners
1000
1,450 – 1,500
1,800 – 2,000
MW Recognized
 RLC Key Drivers
– Market Price for standard efficiency modules and SPWR premium
– Country mix – market share and ASPs
– Bundle Inclusion Rate
(1)
(2)
– 3rd Party product sales through channel
Excludes charges from intangible assets, stock based compensation and non-cash interest expense
Bundle Inclusion Rate is the % of product shipped as a bundled package
**Influenced by third party panel mix
© 2010 SunPower Corporation
88
Residential & Commercial Segment
Revenue by Quarter Adjusted for Flat Market Growth
40%
35%
30%
25%
20%
15%
10%
5%
0%
Q1
Q2
2011
Q3
Q4
Steady State
 Working Capital Requirements
– RLC: Low – Inventory and accounts receivable
– NAC: Medium – Inventory, accounts receivable, and letters of credit
© 2010 SunPower Corporation
89
Operating Expense
 Long-term Operating Expense target ~10% of revenue
 R&D Focus:
– Manufacturing efficiency: Step reduction, OEE, Yield
– Technology improvement: higher efficiency, BOS / Oasis
– New technology - CPV
Non-GAAP OpEx as % of Revenue(1)
2009 Actual
2010 Forecast
2011 Outlook
Research & Development
1.7%
1.9% – 2.0%
1.6% – 2.2%
Selling, General & Administrative
10.3%
10.2% – 10.4%
8.4% – 9.8%
Total Operating Expense as a % of Revenue
12.0%
12.1% – 12.4%
10.0% – 12.0%
2009 Actual
2010 Forecast
2011 Outlook
Research & Development
2.1%
2.2%–2.3%
2.0%–2.3%
Selling, General & Administrative
12.5%
13.7%–13.9%
10.8%–12.5%
Total Operating Expense as a % of Revenue
14.6%
15.9%–16.2%
12.8%–14.8%
GAAP OpEx as % of Revenue
(1)
Excludes charges from intangible assets, stock based compensation and promissory notes
© 2010 SunPower Corporation
90
Other Income and Expense
 Interest Income: low current interest rates
 Interest Expense: consistent with corporate debt
 Foreign Exchange
– We derisk revenue & balance sheet by hedging FX with forwards & options
– Foreign exchange expense comprised of the following:
– Hedging Costs (i.e. time value of option premium)
– Net gain/loss on balance sheet hedge program
Non-GAAP(1)
($ millions)
2010 Forecast
2011 Outlook
GAAP
($ millions)
($65) – ($70)
($70) – ($80)
OIE
Interest Income
~4%
~1%
Interest Income
~1%
Interest Expense
60 - 65%
50% - 60%
Interest Expense
55% - 70%
Hedging Costs
40 - 45%
40 - 50%
Hedging Costs
30% - 45%
OIE
(1)
2010 Forecast
2011 Outlook
($6) – ($1)
($95)-($105)
Excludes charges from discontinued operations, intangible assets, stock based compensation and non-cash interest expense
© 2010 SunPower Corporation
91
Equity in Unconsolidated Subsidiaries
 Gain on change in equity interest in unconsolidated investee
– Woongjin Energy (WJE): 34% ownership stake
– Fab 3 AUO SunPower: 50% ownership stake
 Expected Q4 2010 and 2011 net loss, 2012+ accretive
– WJE benefits offset Fab 3 expenses in Q4 2010-2011
($ Millions)
Equity in Unconsolidated Subsidiaries
Tax Rate(1)
GAAP
Non-GAAP(2)
(1)
(2)
Tax Rate impacted by country mix
Reflects related tax effects of all adjustments
2009
Actual
2010
Forecast
2011
Outlook
$9.9
~$2.2
$0
2009
Actual
2010
Forecast
2011
Outlook
48%
34% - 42%
35% - 37%
22.8%
13% - 16%
15% – 17%
© 2010 SunPower Corporation
92
Share Count Forecast
 Guidance: We will report non-GAAP Earnings Per Share (EPS) and
guide outstanding shares using the ―diluted‖ method until such time as
there is a conversion. GAAP share count driven by GAAP profitability.
 Background:
– The company previously used the GAAP share count to compute nonGAAP EPS. With our convertible debt, we are subject to quarterly
variations including YTD changes in share count.
– If-converted method (used in Q3 ‗09 and Q3 ‗10) is triggered at certain
levels of GAAP profitability. To calculate EPS, interest income on the
convertible debt is added to net income.
Shares Outstanding (Millions)
2009 Actual
2010
Forecast
2011
Outlook
Basic Share Outstanding
91
96
98–99
Diluted Shares
93
97
99–100
If-converted method (add $7 MM in net income)
99
106
108–109
Share growth
+2–3%
© 2010 SunPower Corporation
93
GAAP vs. Non-GAAP Adjustments
Total Net Income Adjustments
(full year in millions)
2009 Actual
2010
Forecast
2011
Outlook
Amortization of intangible assets
$16
$38–$39
$27–$28
Stock-based compensation
$47
$54–$55
$62–$63
Non-cash interest expense
$23
$28–$31
$28–$31
Amortization of promissory notes
–
~$11
~$3
Discontinued operations
–
–
–
Mark-to-market derivatives
($21)
($29)(1)
–
Gain on deconsolidation of
consolidated subsidiary
–
($37)
–
Gain on change in equity interest in
unconsolidated investee
–
($28)
–
($4)
~$20
~$15
Tax effect
(1)Mark-to-market
derivates are booked based on the closing price of SPWRA at quarter end related to our call spread
overlay. Given we can‘t predict this, we assume no charges in the future.
© 2010 SunPower Corporation
94
Dennis Arriola, EVP CFO
Finance
© 2010 SunPower Corporation
© 2010 SunPower Corporation
Agenda

Project Financing

Balance Sheet and Liquidity Update

Currency Management Program

A/B Shares Update

Business Catalysts

2011 Guidance
© 2010 SunPower Corporation
96
Montalto 44 MW Solar Bonds Structure: €200M
SunPower Corp.
Subsidiary
SACE Guarantee
A1 Loans
VAT Facility and security package
Montalto Limited
Liability Co.
(Borrower)
A2 Loans
Lead Arrangers
Montalto Limited
Liability Finance
Co. (Issuer)
Note: This chart does not contain actual names of legal entities.
A1 Bonds €100M
(Markets)
A2 Bonds –
€100M
(EIB)
© 2010 SunPower Corporation
97
Corporate vs. Project Financing
Corporate/Bank Financing
Project Financing
Borrower
Parent or Subsidiary
Project company
Use of Proceeds
General Corporate purposes Specific to project; use can
be audited
Timing to Close
4-8 weeks
6-12 months
Repayment Source
General corporate cashflow,
refinancing, sale of assets,
capital markets
Project cashflows
Recourse to Parent
Usually
No, only to project
Term of Loan
1-7 years
Up to 20 years
Due Diligence
Parent credit profile
Detailed project specific
Pricing/Fees
Market driven/based on
corporate credit
Project driven/based on
project risks
Costs to Close
Lower
Higher
© 2010 SunPower Corporation
98
Debt and Leverage Ratios
1,200
+$250
-$233
Debt in USD Millions
1,000
$805
-$144
800
+$70
+$50
$798
IFC Loan
2010-end
600
400
200
0
2009-end
Convert Issuance in Malaysian Gov't Convert Repayment Woongjin Secured
April 2010
Debt Transferred to
Revolver
JV
Covenant
Threshold
2009-end
Actual
2010-end
Forecast
Long-Term
Target
Debt /
(Debt + Equity)
<55%
36%
34% – 35%
25% – 35%
Debt /
Trailing EBITDA
<4.0
3.7
2.7 – 2.8
1.5 – 2.0
Note: Excludes SunRay project debt since it is non-recourse to SunPower Corp
99
Balance Sheet and Liquidity Update
 $438M in cash and investments at end of Q3
– $281M available and unrestricted
 $145M of additional liquidity added since end of Q3
– Finalized $75M IFC loan agreement
– New $70M revolving credit facility w/Woongjin Energy shares as
collateral; can be expanded to $100M
– Woongjin Shares market value = ~$340M; book value = $73M
 Negotiating new €75M revolving credit facility to fund working capital
for European development projects
 Developing financing programs for residential/commercial customers
 Cash inflows of approximately $380M in Q4 and $56M in Q1 ‗11
related to financing/ monetization of Montalto 44 and Solare Roma
© 2010 SunPower Corporation
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FX Hedging Approach
Initial
Quote
Negotiation
Pricing
Sales
Contract
Revenue/
Billing
Receivable
Maximum
Hedge %
Collections/Cash
Maximum
Hedge %
Minimum X%
Hedge%
Minimum
Hedge %
X%
T-5
T-4
T-3
Exposure Period
T-2
Prior Period
T-1
Minimum
Hedges
P&L Hedge
Cost of Hedging
Recorded in Other Income & Expense
Gain/(Loss) on Hedge & Unhedged
Recorded in Revenue /Gross Margin
Now
T0
Next Period
X%
T+1
T+2
T+3
Exposure
Period
X%
Balance Sheet Hedge
X%
Recorded in Other Income & Expense
Recorded in Other Income & Expense
SunPower hedges in line with exposures under defined hedge coverage
levels
© 2010 SunPower
Corporation
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1
A/B Share Combination Update
 From 10/29/10 to 9/29/11, Cypress Tax Sharing Agreement requires
one of following to effect a combination of the A and B shares into a
single share class:
– §355(e) legal opinion from a nationally recognized tax advisor in a form
acceptable to Cypress; or
– IRS ruling that such a recapitalization would not violate §355(e).
 SPWR believes tax counsel can deliver an acceptable tax opinion to
satisfy Cypress‘s requirements.
 Combination transaction form (tender offer, etc.) is being analyzed.
 Probable timing of a potential combination is first half of 2011.
© 2010 SunPower Corporation
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Q4’10/Q1’11 Business Catalysts
 Financing and Monetization of Montalto 44 MW & Solare Roma 13 MW
 Project Financing Updates
 Additions to UPP/Commercial Pipelines
 CVSR (250 MW): Permitting/Financing Updates
 3rd Party Supply Agreements
 Updates to Fab 3
 Cost Reduction Progress Updates
 Oasis Rollout Update
© 2010 SunPower Corporation
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Financial Focus and Levers in 2011
Priority
Impact
CapEx: Cost Reduction
Accelerate panel and BOS cost/watt
reductions
Finance and Monetize Projects Early
Reduce cash funding and impact on
balance sheet; improves rev. rec.
Working Capital Optimization
Generate operating cashflow; reduce
leverage
Leverage Operating Expenses
Improves operating margin/EPS/cashflow
Maximize PV allocation value
Higher gross margins
Free Cashflow Generation
Strengthens balance sheet and liquidity
ROIC vs. WACC: A Way of Life
Long term shareholder value creation
© 2010 SunPower Corporation
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2011 Guidance – Non GAAP
Q1 Guidance
2011
Guidance
Q2 Outlook
Q3 Outlook
Q4 Outlook
MW Recognized
135-155 MW
785-900 MW
175-200 MW
190-220 MW
285-325 MW
Revenue
$450-$500M
$2.65-$2.85B
$550-$600M
$650-$700M
$1.00-$1.05B
UPP %
55%-60%
50%-55%
48%-53%
45%-50%
55%-60%
R&C %
40%-45%
45%-50%
47%-52%
50%-55%
40%-45%
20%-22%
20%-22%
UPP %
20%-22%
20%-22%
R&C %
21%-23%
21%-23%
Op Ex
$76-$78M
10%-12%
OIE (1)
$16-$18M
$70-$80M
Tax rate%
15%-17%
15%-17%
$0.12-$0.20
$1.75-$2.05
$0.20-$0.30
$0.35-$0.55
$0.90-$1.20
WASO (2)
97-98MM
99-100M
98-99M
99-100M
99-100M
CapEx
$50-$55M
$130-$150M
$30-$35M
$35-$40M
$15-$20M
JV Contributions
$70-$75M
$180-$190M
$30-$35M
$30-$35M
$45-$50M
Gross Margin
EPS
(1) Includes net interest expense and cash hedging costs; excludes non-cash mark-to-market adjustments for changes to volatility and FX rates
(2) Non-GAAP EPS will be calculated with fully diluted shares in 2011, not with if-converted shares; Assumes 3% annual growth
© 2010 SunPower Corporation
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2011 FX Guidance
Total 2011
Hedge Coverage
Minimum Wtd. Average Hedge Rate
70%
$1.33 to €1
Impact of $0.01 change in $/Euro spot rate on Revenue
+/- $5.6M
Impact of $0.01 change in $/Euro spot rate on
Operating Margin
+/- $2.5M
 Hedge portfolio is comprised of options and forwards
© 2010 SunPower Corporation
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2011 Financing Plan
$ in Millions
Strategies
Cash Flow from Ops*
$310 – $190
Focus on W/C; Allocation to higher
margin sales
CapEx
($130) – ($150)
Reprioritize and defer non-essential
CapEx
AUO JV
($180) – ($190)
External financing options under
evaluation (e.g. EXIM)
Free Cash Flow
$0 – ($150)
Targeting slightly below breakeven
cash flow excluding project financing
Existing Cash 2010
$400 – $450
2011 Plan ends with > $500 in
available cash
Liquidity Facilities
$95– $130
Negotiating new bank facilities
Asset Optimization
$100 – $200
Pre-selling projects; Woongjin Energy
equity; partnerships for development
Funding Sources:
*Cash flow from operations nets project assets of ~$320M and project debt of ~$260.M
© 2010 SunPower Corporation
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2011: Predictable and Sustainable Growth
 Increased transparency and understanding of financial model
 Planned MW output drives revenue growth
 Revenue predictability through UPP and NA Commercial contracts;
flexibility through growing dealer channel
 Cost reduction strategy on schedule for panel and BOS cost/watt
 Stronger balance sheet, liquidity, cashflow
 2010 success and expanding relationships to finance and sell projects
© 2010 SunPower Corporation
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SunPower Team
 Tom Werner, CEO
 Jim Pape, President R&C
 Howard Wenger, President UPP
 Chuck Boynton, VP Finance and Corp. Development
 Dennis Arriola, EVP and CFO
 Julie Blunden, EVP Public Policy Corp. Communications
 Bob Okunski, Sr. Director Investor Relations
© 2010 SunPower Corporation
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2011 Guidance – GAAP
Q1 Guidance
2011
Guidance
Q2 Outlook
Q3 Outlook
Q4 Outlook
MW Recognized
135-155 MW
785-900 MW
175-200 MW
190-220 MW
285-325 MW
Revenue
$450-$500M
$2.65-$2.85B
$550-$600M
$650-$700M
$1.00-$1.05B
UPP %
55%-60%
50%-55%
48%-53%
45%-50%
55%-60%
R&C %
40%-45%
45%-50%
47%-52%
50%-55%
40%-45%
19%-21%
19%-21%
UPP %
19%-21%
19%-21%
R&C %
20%-22%
20%-22%
Op Ex
$94-$97M
13%-15%
OIE
$22-$24M
$95-$105M
Tax rate%
35%-37%
35%-37%
($0.20)-($0.10)
$0.35-$0.65
($0.05)-$0.05
$0.05-$0.15
$0.45-$0.55
96-97M
108-109M
97-99M
99-100M
108-109M
CapEx
$50-$55M
$130-$150M
$30-$35M
$35-$40M
$15-$20M
JV Contributions
$70-$75M
$180-$190M
$30-$35M
$30-$35M
$45-$50M
Gross Margin
EPS
WASO (1)
(1) GAAP EPS is calculated with basic shares for Q1, basic/diluted shares for Q2, diluted shares for Q3, if-converted shares for Q4 and if-converted shares
for full year 2011; Assumes 3% annual growth
© 2010 SunPower Corporation
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About SunPower’s Non-GAAP Financial Measures
To supplement its consolidated financial results presented in accordance with GAAP, SunPower uses non-GAAP
measures which are adjusted from the most directly comparable GAAP results to exclude non-cash charges related
to amortization of intangible assets and promissory notes, stock-based compensation and interest expense as well as
exclude non-cash net gains on mark-to-market derivative instruments, a gain on the change in our equity investment
in a joint venture, a gain on deconsolidation of consolidated subsidiary, and the related tax effects of these
adjustments. In addition, the presentation of non-GAAP results of operations reclassifies the discontinued
operations results to the natural account classifications (revenue, etc.). Management believes that these non-GAAP
measures are useful to investors by enabling them to better assess changes in each of these key elements of
SunPower's results of operations across different reporting periods on a consistent basis, independent of these noncash items. Thus, these non-GAAP financial measures provides investors with another method for assessing
SunPower's operating results in a manner that is focused on its ongoing core operating performance, absent the
effects of amortization of intangible assets and promissory notes, stock-based compensation, interest expense, net
gains on mark-to-market derivative instruments, a gain on the change in our equity investment in a joint venture, a
gain on deconsolidation of consolidated subsidiary, and the presentation of the results of discontinued operations.
Management also uses these non-GAAP measures internally to assess the business and financial performance of
current and historical results, for strategic decision making, forecasting future results and evaluating the company's
current performance. Many of the analysts covering SunPower also use these non-GAAP measures in their analyses.
These non-GAAP measures are not in accordance with or an alternative for GAAP financial data, the non-GAAP
results should be reviewed together with the GAAP results and are not intended to serve as a substitute for results
under GAAP, and may be different from non-GAAP measures used by other companies.
Non-Cash Items
o Amortization of intangible assets. SunPower incurs amortization of intangible assets as a result of acquisitions,
which includes in-process research and development, patents, project assets, purchased technology and trade names.
SunPower excludes these items because these expenses are not reflective of ongoing operating results in the period
incurred. These amounts arise from prior acquisitions and have no direct correlation to the operation of SunPower’s
core businesses.
o Stock-based compensation. Stock-based compensation relates primarily to SunPower stock awards such as stock
2010period
SunPower
options and restricted stock. Stock-based compensation is a non-cash expense that varies in amount ©from
to Corporation
period and is dependent on market forces that are difficult to predict. As a result of this unpredictability,
management excludes this item from its internal operating forecasts and models. Management believes that non111
GAAP measures adjusted for stock-based compensation provide investors with a basis to measure the company’s
o Stock-based compensation. Stock-based compensation relates primarily to SunPower stock awards such as stock
options and restricted stock. Stock-based compensation is a non-cash expense that varies in amount from period to
period and is dependent on market forces that are difficult to predict. As a result of this unpredictability,
management excludes this item from its internal operating forecasts and models. Management believes that nonGAAP measures adjusted for stock-based compensation provide investors with a basis to measure the company’s
core performance against the performance of other companies without the variability created by stock-based
compensation.
o Amortization of promissory notes. Included in the total consideration for the acquisition of SunRay completed on
March 26, 2010 is $14 million in promissory notes to SunRay’s management shareholders issued by SunPower.
Since the vesting and payment of the promissory notes are contingent on future employment, the promissory notes
are considered deferred compensation and therefore are not included in the purchase price allocated to the net assets
acquired. SunPower excludes this non-cash charge over the service period required under the terms of the
promissory notes because these expenses are not reflective of ongoing operating results in the period incurred. These
amounts arise from prior acquisitions and have no direct correlation to the operation of SunPower’s core businesses.
o Non-cash interest expense. SunPower separately accounted for the liability and equity components of its
convertible debt issued in 2007 in a manner that reflected interest expense equal to its non-convertible debt
borrowing rate. Under new accounting guidance effective in the first quarter of 2010, SunPower measured the two
existing share lending arrangements entered into in connection with its convertible debt issued in 2007 at fair value
and amortized the imputed share lending costs in current and prior periods. As a result, SunPower incurs interest
expense that is substantially higher than interest payable on its 1.25% senior convertible debentures and 0.75%
senior convertible debentures.
In addition, SunPower separately accounted for the fair value liabilities of the embedded cash conversion option and
the over-allotment option on its 4.5% senior cash convertible debentures issued in April 2010 as an original issue
discount and a corresponding derivative conversion liability. As a result, SunPower incurs interest expense that is
substantially higher than interest payable on its 4.5% senior cash convertible debentures. SunPower excludes noncash interest expense because the expense is not reflective of its ongoing financial results in the period incurred.
Excluding this data provides investors with a basis to compare the company’s performance against the performance
of other companies without non-cash interest expense.
© 2010 SunPower Corporation
o Gain on deconsolidation of consolidated subsidiary. SunPower’s joint venture transaction with AU Optronics
Singapore Pte. Ltd. closed on July 5, 2010, the first day of the third quarter of 2010. Under the joint venture
agreement SunPower’s equity interest in SunPower Malaysia Manufacturing Sdn. Bhd., formerly a wholly-owned
subsidiary, was reduced to 50% and the entity was renamed AUO SunPower Sdn. Bhd. (“AUOSP”). Each investor
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o Gain on deconsolidation of consolidated subsidiary. SunPower’s joint venture transaction with AU Optronics
Singapore Pte. Ltd. closed on July 5, 2010, the first day of the third quarter of 2010. Under the joint venture
agreement SunPower’s equity interest in SunPower Malaysia Manufacturing Sdn. Bhd., formerly a wholly-owned
subsidiary, was reduced to 50% and the entity was renamed AUO SunPower Sdn. Bhd. (“AUOSP”). Each investor
has a 50% equity ownership in the joint venture. As a result of the shared power arrangement SunPower
deconsolidated AUOSP. SunPower recognized a $36.8 million non-cash gain from the deconsolidation of the
consolidated subsidiary in the third quarter of 2010. SunPower excluded the non-cash gain from its non-GAAP
results because it was not realized in cash and it is not reflective of the Company’s ongoing financial results.
Excluding this data provides investors with a basis to compare the Company’s performance against the performance
of other companies without non-cash income from a gain on deconsolidation and fair value recognition of the equity
interest in AUOSP.
o Gain on change in equity interest in unconsolidated investee. On June 30, 2010, Woongjin Energy Co., Ltd
completed its initial public offering and the sale of 15.9 million new shares of common stock. SunPower did not
participate in this common stock issuance by Woongjin Energy. As a result of the new common stock issuance by
Woongjin Energy in the IPO, SunPower’s percentage equity interest in Woongjin Energy decreased from 42.1% to
31.3% of Woongjin Energy’s issued and outstanding shares of common stock. In connection with the IPO,
SunPower recognized a non-cash gain of $28.3 million representing the excess of the IPO price over SunPower’s
per share carrying value of its shares. SunPower excluded the $28.3 million gain in the second quarter 2010 from its
non-GAAP results because it was not realized in cash and it is not reflective of the company’s ongoing financial
results. Excluding this data provides investors with a basis to compare the company’s performance against the
performance of other companies without non-cash income from a gain on change in the company’s equity interest in
Woongjin Energy.
o Gain on mark-to-market derivative instruments. In connection with the issuance of its 4.5% senior cash
convertible debentures in April 2010, SunPower entered into certain convertible debenture hedge and warrant
transactions with respect to its class A common stock intended to reduce the potential cash payments that would
occur upon conversion of the debentures. The convertible debenture hedge and warrant transactions consisting of
call option instruments are deemed to be mark-to-market derivatives during the period in which the cash convertible
2010
Corporation
debt remains outstanding. In addition, the embedded cash conversion option of the debt is deemed©to
be SunPower
a mark-tomarket derivative instrument during the period in which the cash convertible debt remains outstanding. Finally, the
over-allotment option in favor of the debenture underwriters is deemed a mark-to-market derivative instrument
113
during the period the over-allotment option remained unexercised. SunPower excluded the $28.9 net gain in the nine
o Gain on mark-to-market derivative instruments. In connection with the issuance of its 4.5% senior cash
convertible debentures in April 2010, SunPower entered into certain convertible debenture hedge and warrant
transactions with respect to its class A common stock intended to reduce the potential cash payments that would
occur upon conversion of the debentures. The convertible debenture hedge and warrant transactions consisting of
call option instruments are deemed to be mark-to-market derivatives during the period in which the cash convertible
debt remains outstanding. In addition, the embedded cash conversion option of the debt is deemed to be a mark-tomarket derivative instrument during the period in which the cash convertible debt remains outstanding. Finally, the
over-allotment option in favor of the debenture underwriters is deemed a mark-to-market derivative instrument
during the period the over-allotment option remained unexercised. SunPower excluded the $28.9 net gain in the nine
months ended October 3, 2010 relating to the above mentioned derivative instruments from its non-GAAP results
because it was not realized in cash and it is not reflective of the company’s ongoing financial results. Excluding this
data provides investors with a basis to compare the company’s performance against the performance of other
companies without a net non-cash gain on mark-to-market derivative instruments.
In connection with the issuance of its 4.75% senior convertible debentures in May 2009, SunPower entered into
certain convertible debenture hedge transactions with respect to its class A common stock intended to reduce the
potential dilution that would occur upon conversion of the debentures. The convertible debenture hedge transactions
consisting of call option instruments are deemed to be a mark-to-market derivative during the period in which the
over-allotment option in favor of the debenture underwriters was unexercised. During the one-day period that the
underwriters’ over-allotment option was outstanding, SunPower’s class A common stock price increased
substantially. SunPower excluded the $21.2 million gain in the second quarter 2009 relating to the purchased options
from its non-GAAP results because it was not realized in cash and it is not reflective of the company’s ongoing
financial results. Excluding this data provides investors with a basis to compare the company’s performance against
the performance of other companies without non-cash income from a gain on purchased options.
o Tax effect. This amount is used to present each of the amounts described above on an after-tax basis with the
presentation of non-GAAP net income per share.
o Income from discontinued operations, net of taxes. In connection with SunPower’s acquisition of SunRay on
March 26, 2010, it acquired an already completed and operating solar power plant owned by SunRay.
In the period
© 2010 SunPower
Corporation
in which an asset of SunPower is classified as held-for-sale, it is required to present the related assets, liabilities and
results of operations associated with that asset as discontinued operations in its financial statements in accordance
with GAAP. During the second and third quarter 2010, SunPower generated electricity revenue and incurred costs
114
and expenses associated with this owned asset. In the third quarter of 2010, SunPower recognized a pre-tax gain of
o Income from discontinued operations, net of taxes. In connection with SunPower’s acquisition of SunRay on
March 26, 2010, it acquired an already completed and operating solar power plant owned by SunRay. In the period
in which an asset of SunPower is classified as held-for-sale, it is required to present the related assets, liabilities and
results of operations associated with that asset as discontinued operations in its financial statements in accordance
with GAAP. During the second and third quarter 2010, SunPower generated electricity revenue and incurred costs
and expenses associated with this owned asset. In the third quarter of 2010, SunPower recognized a pre-tax gain of
$7.9 million for the sale of the asset on August 5, 2010. The presentation of SunPower’s Condensed Consolidated
Statements of Operations discloses the results of operations of the solar power plant as a one line item classification
as discontinued operations in accordance with GAAP. The presentation of non-GAAP results of operations
reclassifies the discontinued operations results to the natural account classifications (revenue, etc.) in the second and
third quarter 2010. SunPower believes this reclassification of the solar power plants results of operations provides an
appropriate representation of the results of SunPower's operations during the quarters in operating a solar power
plant.
For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of
GAAP Measures to Non-GAAP Measures" set forth at the end of this presentation and which should be read
together with the preceding financial statements prepared in accordance with GAAP.
© 2010 SunPower Corporation
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© 2010 SunPower Corporation
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© 2010 SunPower Corporation
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